Wright Tremaine LLP, New York (Laura R. Handman of counsel),
McGuire Woods LLP, New York (Jeffrey J. Chapman of counsel),
Sullivan Koch & Schulz, LLP, New York (Michael Berry of
counsel), for amici curiae.
Sweeny, J.P., Mazzarelli, Webber, Kahn, Kern, JJ.
Supreme Court, New York County (Carol R. Edmead, J.), entered
February 14, 2017, which granted the petition for pre-action
disclosure, unanimously reversed, on the law and the facts,
without costs, the petition denied, and the proceeding
dismissed. Appeal from interim order, same court and Justice,
entered December 15, 2016, unanimously dismissed, without
costs, as academic.
provides subscribers with real-time information about
debt-distressed companies via daily emails. The petition
alleges that two articles published by respondent about
petitioner contain information that was only available to a
select group of people, all of whom were bound by
confidentiality agreements. Petitioner seeks pre-action
disclosure to determine the identities of respondent's
sources to facilitate bringing breach of contract actions
against them (see CPLR 3102[c]).
to respondent's contention, the petition states a cause
of action for breach of contract (see Sandals Resorts
Intl. Ltd. v Google, Inc., 86 A.D.3d 32, 38 [1st Dept
we find that respondent is exempt from having to disclose the
names of its confidential sources by New York's Shield
Law (see Civil Rights Law § 79-h), because it
is a "professional medium or agency which has as one of
its main functions the dissemination of news to the
public" (id. [subd] [b], [a]).
is correct that the audience for respondent's content is
not the general public, but rather its relatively limited
subscriber base, consisting of 375 unique subscribers with
more than 9, 000 individual authorized users. In addition,
respondent's subscription fees are relatively high,
ranging from $30, 000 to $120, 000 per year, depending on the
size of the organization and the number of authorized users.
Respondent also places contractual restrictions on further
dissemination of its content, although these restrictions are
far less broad than petitioner suggests, since limited
personal distribution and excerpting of "brief
quotations" are expressly permitted.
respondent's expert affidavits establish that these
features are not uncommon among, and in fact are essential to
the economic viability of, specialty or niche publications
that target relatively narrow audiences by focusing on a
topic not ordinarily covered by the general news media - such
as the debt-distressed market. This expert opinion is
corroborated by amici, which include several prominent news
organizations that "either originally entered the media
landscape focused on a particular subset of readers, and/or
publish at least one subscription-only publication or
premium-content service on a specialized topic."
respondent and amici argue persuasively that the public
benefits secondarily from the information that respondent
provides to its limited audience, because that audience is
comprised of the people who are most interested in this
information and most able to use and benefit from it. More
importantly, given the substantial investment required to
unearth this information and the limited number of interested
readers, the alternative is not broader coverage but no
coverage at all.
respondent established that its editorial staff is solely
responsible for deciding what to report on and that it does
not accept compensation for writing about specific topics or
permit its subscribers to dictate the content of its
reporting. Other courts have found the extent of a
publication's independence and editorial control to be
important in determining whether to apply the Shield Law
(see e.g. Pan Am Corp. v Delta Air Lines, Inc., 161
BR 577, 584 [SD NY 1993]; In re Scott Paper Co. Sec.
Litig., 145 FRD 366, 370 [ED Pa 1992]; cf. In re
Fitch, Inc., 330 F.3d 104, 111 [2d Cir 2003] [credit
reporting agency not protected by Shield Law where
communications with the client "reveal a level of
involvement with the client's transactions that is not
typical of the relationship between a journalist and the
activities upon which the journalist reports"];
LaSalle Natl. Bank v Duff & Phelps Credit Rating
Co., 951 F.Supp 1071, 1096 [SD NY 1996] [credit
reporting agency not protected by Shield Law where, inter
alia, its rating "was privately contracted for and
intended for us in the private placement Offering
Memoranda"]). We concur.
protection to respondent under the Shield Law is consistent
with New York's "long tradition, with roots dating
back to the colonial era, of providing the utmost protection
of freedom of the press" - protection that has been
recognized as "the strongest in the nation"
(Matter of Holmes v Winter, 22 N.Y.3d 300, 307, 310
, cert denied __ U.S. __, 134 S.Ct. 2664');">134 S.Ct. 2664
). To condition coverage on a fact-intensive inquiry
analyzing a publication's number of subscribers,
subscription fees, and the extent to which it allows further